DLF seeks strategic partner to develop 12-acre Gurugram plot

DLF was expected to pay an additional Rs 143 crore for Transit-Oriented-Development rights.

Realty major DLF is looking to rope in a strategic partner to undertake joint development of its nearly 12-acre Gurugram land parcel that it had acquired for nearly Rs 1,500 crore, and is currently in talks with private equity firms with exposure to the National Capital Region (NCR) for the same, said two persons familiar with the development.

The company had recently emerged as the highest bidder for this land parcel put on the block by Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) in a closely contested auction.

This was an unprecedented price paid for a land parcel in the NCR property market. The deal that was concluded through an e-auction earlier this year, at a base price of over Rs 127 crore per acre, had surpassed all earlier benchmarks.

Saurabh Chawla, group CFO of DLF, confirmed that the company is in advanced stages of dialogue with an investor for this transaction, but declined to elaborate further. The company and its joint venture partner are expected to share the construction cost in addition to land and registration charges.

“The transaction with one of the private equity players is expected to be concluded over the next couple of weeks. The project entails total development potential of 2.5 million sq ft and the construction cost is estimated to be around Rs 5,000 per sq ft,” said one of the persons mentioned above.

The land parcel is located on NH8 behind Oberoi Hotel in Gurugram, and has the potential to develop both commercial and retail spaces on the lines of DLF’s retail and commercial development Horizon Centre at DLF5 in Gurugram. This is an extension of the established DLF Cyber City micro market.

The said 11.76-acre land parcel has a leaseable potential of around 2.3 million sq ft. The plot has base floor space index of 1.75 times, which would double to 3.5 times after factoring in the benefit of Transit Oriented Development (TOD) rights.

DLF was expected to pay an additional Rs 143 crore for Transit-Oriented-Development rights. It had to pay Rs 120 crore for registration of the land parcel, taking the total deal value to Rs 1,759 crore, against the reserve price for the land parcel that was set at about Rs 686 crore.

DLF and Bharti Realty had emerged as the contenders in the final round out of the more-than-half-a-dozen developers, including Indiabulls Real Estate, Experion Developers, Emaar Group, Embassy Group and RMZ showing interest in this land parcel.

In November 2017, global home furnishing company Ikea had bought a 10-acre land parcel in Gurugram for Rs 842 crore through an e-auction conducted by HUDA, the Haryana government’s development agency.

DLF was earlier expected to push this development into DLF Cyber City Developers (DCCDL), its joint venture with Singapore sovereign fund GIC. Promoters of DLF have sold their 33.34% stake in its rental arm DLF Cyber City Developers (DCCDL) to GIC for nearly Rs 9,000 crore. The transaction was concluded on December 26, and the company now holds the balance 66.66% in DCCDL.

Currently, the rental arm’s portfolio includes leased space of 27 million sq ft and nearly 4 million sq ft under construction. The joint entity also has access to a land bank that has additional development potential of 19 million sq ft.

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